£1M Payoff

Tony Hayward, the outgoing CEO of BP, has negotiated a £1M payoff and a £10M pension pot.

As a result of the oil spill BP reported in its Q2 results a provision for $32.2BN and a loss of $17BN, the largest loss in British corporate history.

Quite why BP's all but invisible chairman, Carl-Henric Svanberg, who described the residents of the Gulf Coast as "small people" remains in situ is a mystery.

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Unite Tries To Hold Back The Tide

Unite, the union that represents Cadbury employees, is rightly worried that the proposed leveraged takeover of Cadbury by Kraft may lead to job losses in the UK.

Aside from organising a rather futile employee protest in Bournville, the home of Cadbury, today the union says that Kraft must give assurances that the interests of the workforce will not be swept aside in the deal, and that the quality of the products will be safeguarded.

Or what?

What exactly will Unite do, or be able to do, if Kraft doesn't give these assurances?

It is powerless to stop this, and its "demands" as empty and as meaningless as Gordon Brown's promise last week to do everything possible to protect Cadbury jobs.

At best, all that will happen will be that Kraft issue some form of nicely worded soothing message that will not be worth the paper it is printed on.

The only way to stop this is if the shareholders vote it down, which they won't do. As I noted last week, hedge funds snapped up a large number of shares in Cadbury in Q4 2009 when news of the possible takeover came out. They have no loyalty to either the company or the workforce.

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Cadbury Kowtow To Kraft

The board of Cadbury have accepted Kraft's 840p offer.

Cadbury chairman, Roger Carr, is quoted on Citywire:

"We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world."

Doubtless the board would not have given in if they did not believe that they had the support of key shareholders. It should be noted that, when details of an initial offer were made public in September, hedge funds were more than keen to snap up shares in Cadbury.

However, whether all the shareholders are as happy with the deal remains to be seen.

The board were also advised by the banks that they would not achieve a better deal. It should also be noted that, on the assumption that the deal goes ahead, the banking advisers to Cadbury and Kraft will reap a windfall of £150M.

However, the support of the workforce is not guaranteed, given what Kraft's plans may actually be for the future of Cadbury.

Gordon Brown, fearful of his re-election prospects, made a grab for the headlines by saying:

"We are determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained and we are determined that, at a time when people are worried about their jobs, that jobs in Cadbury can be secure."

All very nice and voter friendly, but there is nothing that he can do to stop Kraft doing whatever they wish with the company once they take ownership of it.

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The Yorkshire Chelsea Merger

Those members of Chelsea and Yorkshire building societies (due to merge by next April) who had hoped that they may received a windfall, should keep their champagne on ice for another day.

There will be no windfall for members, but there will be job losses for the 3,200 staff working at the 178 branches.

The merged behemoth, to be named Yorkshire Building Society, will have combined assets of £35BN, and 2.7M members.

In reality this is not a merger but a takeover of Chelsea, which has lost £44M from the Icelandic banking scandal and £41M due to buy to let mortgage fraud.

Given the "in vogue" political hysteria against banking behemoths, it is surprising that this deal is going ahead and is being trumpeted so vocally.

Perhaps, in this instance, the politicians and regulators are relieved that another "Northern Wreck" has been deftly avoided?

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Lloyds Job Cuts

Lloyds Bank, the 43% taxpayer rescued wreck of a once proud bank, has announced that it will cut a further 5,000 jobs by the end of next year.

Lloyds, at the behest of Gordon Brown, rescued HBOS last year at the height of the banking crisis; it now faces having to "eliminate" a total of 12,500 jobs from a total of 129,000 staff employed in Britain.

Meanwhile HSBC and Barclays both issued positive trading statements, in which they claimed the rise in bad debts has peaked and profits are sustainable.

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Postman Prat

It seems likely that there will be a post strike on or after 22 October.

Whether or not one occurs, the damage to Royal Mail's brand and the long term job prospects of those who claim to be striking for an "improved" postal service has already been done.

Royal Mail customers are already seeking alternatives to the increasingly erratic service, and will never return to the Royal Mail.

Mail volumes are already falling at around 10% a year.

Business Post says it anticipates a 10% rise, while Parcel2Go says a strike will lead to a 20% increase in turnover.

The strikers will soon be looking for alternative employment. They have not seemingly understood the precariousness of their situation.

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Postal Strike

It looks likely that we are going to be lumbered with a post strike this Christmas.

The Communication Workers Union (CWU) claims that it is confident that its 120,000 members voting on the ballot will support industrial action, the results are expected at 12:30 today.

Billy Hayes, the CWU's general secretary, said that workers had little choice.

Nonsense!

No one is forcing them to go on strike.

As I have noted before, there are many alternatives to the Royal Mail. This action will result in future job losses for those who strike, as they push the Royal Mail into oblivion.

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Shrinkage Less Than Expected

Britain's economy shrank by 0.7% in Q2 2009, confounding the "experts" who had predicted a shrinkage of 0.8%.

However, whatever the "experts" feel about this, the reality for those who are unemployed/due to become unemployed is that the recovery is still a very long way off.

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Lloyds Axes Cheltenham & Gloucester (C&G)

Lloyds Banking Group is to close all 164 of its Cheltenham & Gloucester (C&G) branches in the UK, with the loss of up to 1,500 jobs.

This follows the disastrous merger earlier this year, set up by Gordon Brown, with HBOS.

There is one glimmer of "good" news, Andy Hornby (the ex CEO of HBOS who destroyed value at HBOS) has found work with Alliance Boots as their CEO (earning around £1M per annum).

I wonder if the soon to be ex employees of C&G will be equally fortunate?

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The PPI Rip Off

The financial services industry doesn't seem to yet get the point that its reputation is in tatters; not just because of the recession brought about by the greed and stupidity of the banks, but because of a number of issues over the years that impugn its integrity and honesty eg endowment misselling, payment protection insurance (PPI), bank charges, debt collection, credit agreements etc.

Not content with having already severely tarnished its reputation wrt PPI, the insurance industry is seeking to further gouge its own self inflicted wounds by increasing the cost of PPI policies and reducing the actual cover provided.

The Times reports that millions are facing a 50% rise in the cost of PPI cover. Indeed the cost of some PPI policies has already increased by 170% over the last year. The Post Office has written to its PPI customers warning them that it plans to cut the maximum payment in the event of redundancy, and double the cost of some premiums.

Those who clamour for greater regulation of the financial services industry should remain calm, the addiction of those in the industry to destroying their own reputations will ensure that there will be very little remaining of the UK's financial services industry to regulate in ten years time.

By then people will have finally woken up to the fact that they have been ripped off on a continual basis, and will simply resort to putting their money under their mattresses as their grandparents used to do.

The financial services industry will be the author of its own downfall.

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Virgin Backtracks

Now that the finishing post is in site, in the race to take over the corpse of Northern Wreck, those organisations that expressed a very public interest in making a bid are now having to get ready to put their money where their mouths are.

Monday saw Olivant pull out, today it is reported that Virgin are backtracking on a promise not to cut jobs if it succeeds in its bid.

Jayne-Anne Gadhia, the head of Virgin Money, said:

"We cannot continue to make the promise that there will be no redundancies, but we would aim very much to minimise any reductions."

When Virgin originally very publicly announced it was interested in bidding for Northern Wreck, last October, it said that it would keep Northern Rock operating in its current form and did not anticipate any job losses.

Needless to say the unions are not best pleased with this volte face. Unite said that it will meet with the company on Thursday to discuss the details of their bid.

Graham Goddard, Unite deputy general secretary, said:

"Unite will oppose any compulsory redundancies."

That's all very nice, but how exactly do they intend to oppose the redundancies without destroying what remains of the corpse of the bank?

The BBC estimate that approximately 1,000 (1 in 6) members of Northern Wreck's staff will lose their jobs.

It seems that the issue that has caused this volte face by Virgin is the insistence by the government that the loans made by the Bank of England to Northern Rock must be repaid in three years, rather than five years as previously expected.

Money has the rather annoying habit of really focussing the mind!

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The Metronet Debacle

Workers from Metronet facing redundancies, following its demise last week, are urging the prime minister to bring its contracts back into the public sector.

When Gordon Brown was Chancellor he bulldozed the Public Private Partnership (PPP) initiative through, despite fierce opposition, this was the scheme under which Metronet bid for its contracts.

RMT general secretary Bob Crow has asked for infrastructure work to be the control of London Underground.

In a letter to Brown, Crow said:

"The collapse of Metronet means there has to be a fundamental rethink on how the London Underground infrastructure is maintained and renewed.

We support the view of the Mayor of London that infrastructure work should be taken back in-house under the control of London Underground."

Brown will have to make quite a political contortion, something that he is not prone to do, if he is to meet the desires of the Metronet workers; ie it won't happen.

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